Question

You have just opened your own printing business. A large sports franchise is beginning an important advertising campaign in order to attract more fans to the sport. The purchasing officer of the company calls and asks you to make a bid on printing 5,000 high quality posters that are to be given out to important boosters. He asks you to come by his office to talk about the job. There, he tells you that he would like to help you get started in your new business. He says that he has already ask for bids, and the lowest bid is $25,000. He continues by suggesting that you come in with a bid for $24,000 and give him $500 in cash so that you get the bid. Your immediate reaction is to be flattered because you know that this could lead to many more contracts. You go back to your office and calculate your costs. You are pleased to see that you will make about $6,000 on the project, which you really need.

Is the deal suggested by the purchasing office fraud? Explain.

Answer 1

First of all, we shall understand what does fraud mean. Fraud basically means a wrongful activity causing anything to be true when it is actually not, ultimately resulting in personal gain.

In the given case, a large sports franchisee wants to attract more fans of sports for which it wants to launch a large advertising campaign. The Purchase department has approached me for the purpose of printing 5000 high quality posters that shall ultimately attract important and large no. of fans. The purchase officer of the company has called us to give a bid for the contract to print the banners. The company has received a bid for $25,000, against which the purchase officer wants me to counter the above bid by giving a bid lower than the above. The Purchase officer recommends me to give a quote of $24,000, against which the purchase officer wants $500 in return. This act by the purchase officer very well leads to a fraud as defined earlier.

Reasons for the above to be constituted as fraud is as follows:

1. The contract being entered by me and the company is a biased contract.

2. The Banners for advertisements are being provided at a very high price, i.e.a wrongful activity portrayed to be a true activity.

3. The contract so entered shall lead to personal gain to both the sides i.e. the purchase officer and the contractor.

4. The company shall be entering into a contract which has been already over-inflated by $6,000. Also that the company shall be paying extra for the above contract.

Therefore, considering the above reasons, it can be said that the deal so entered is a fraud deal as it would lead to false activity with the company. Not only the purchase officer will have to face the consequences, but also I have to face a lot of consequences i.e. if the fraud is detected, it will ultimately affect my future contracts. Also, it shall also cause legal actions to be powered against me.